Net Lease’s Sale-leaseback and Built-to-Suit Strategy
The growing business who owns real estate can raise an inexpensive working capital and/or debt reduction with Net Lease’s Sale-leaseback and Built-to-Suit Strategy.
Sale-leaseback strategy is a form of financing in which a company sells its real estate for cash and simultaneously signs a long-term lease with the buyer. Sale-leaseback transactions provide the lessee company with a source of capital that is an alternative to other financing sources such as corporate borrowing, mortgaging real property or selling shares of common stock.
A Seller/Tenant is able to convert the value of real estate assets into working capital it can use to:
- Pay-down debt
- Fund acquisitions
- Reinvest in the core competencies of its business
Through build-to-suit strategy, Investor/Lender (“Investor”) provides a growing company with the funding for the expansion of an existing facility or the construction of a new facility in a different location. Investor can source, facilitate, arrange, structure and close the build-to-suit transaction.
The build-to-suit provides innovative financing for:
- Expanding existing facilities/constructing new facilities
- Debt reductions
- Mergers & acquisitions
- Leveraged/management buyouts
- Corporate restructuring/exit financing
- Acquiring addition facilities, technology, and equipment to grow business
- Transition out of a synthetic lease, mortgage or other binding debt instruments
- Matching long-term assets with long-term liabilities
Case Study: WPC’s Key Facts of Net Lease’s Sale-leaseback and Built-to-Suit Strategy
- Well-established, industry-leading tenant: The MAN Group is one of Europe’s leading producers of commercial vehicles, engines and mechanical engineering equipment. It is a publicly traded company with a market capitalization of approximately $15 billion and is 75% owned by German automotive group Volkswagen AG.
- Critical, well-located facilities: The three facilities, originally built to tenant specifications, are among the largest service stations operated by the MAN Group and serve as an important sales driver for its 24/7 fleet repair and maintenance servicing operations. Located on arterial routes, the facilities benefit from the high commercial traffic flow that connects several major German and Austrian cities and links Europe’s eastern and western markets.
- Long-term net leases with built-in rent growth: All three facilities are net leased, with a remaining term of approximately 15 years and CPI-based rent escalations.
Reference: NEW YORK, Sept. 9, 2015 /PRNewswire/ — (NYSE: WPC), a real estate investment trust specializing in corporate sale-leaseback and build-to-suit financing, and the acquisition of single-tenant net lease properties, announced today that it has acquired a portfolio of three modern truck and bus servicing facilities for approximately $42.9 million (€38.9 million). The facilities — two in Germany and one in Austria — were purchased from the developer, Wohnungsunternehmen Semmelhaack, and are net leased to wholly-owned subsidiaries of MAN SE (The MAN Group).
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